Self Funded or Co-operative Plans Can Control Costs

  As premium prices continue to rise for the small to medium sized employer, many are now turning to self funding or co-operatives as a viable option to control costs and offer quality benefits.

Another benefit of self funding is that employers can avoid the increased costs associated with benefit mandates built in to the the Patient Protection and Affordable Care Act (PPACA).   Carriers are increasing their premiums to cover the costs of the increased benefits required by PPACA.   According to Aon Hewitt, premium increases will be, on average,         8.8% in 2011, the highest in five years.  

Self funded or co-operative plans will give employer groups the option to design their own plans to lower costs and maintain control over their benefit dollars.  A 2010  Kaiser Family Foundation survey found that these types of plans  sold for employers with less than 200 employees increased from 12% to 16% of the plans sold between 2008 and 2010, covering more than 70 million Americans.

A qualified benefits administrator will help an employer determine if this is the right approach for their employees, as well as funding options that would be beneficial to employ. 

While the state of PPACA remains unclear until all legal challenges are completed and all regulaltions implemented, it is clear that there will be a dramatic uptic in premium costs.   By exploring the options available through Self Funding or Co-operatives, it is possible for emplyer groups to regain control over their premum dollars and manage costs.

Health Reform – The Fighting Continues!

Health Reform – The Fighting Continues!

 Republicans, with their newly won control of the House of Reprsentatives,  would seem to pose the greatest threat to the health reform law.  They’ve already passed a repeal bill, threatened to defund implementation, and begun holding hostile hearings. Despite these  moves, the biggest threat to the law may come from the judiciary. Two weeks ago, a Florida federal district court ruled the entire law invalid. While the decision is unlikely to have any immediate impact, it represents the second judicial ruling against health reform and makes an eventual Supreme Court decision striking down the law seem more plausible than most would have thought when President Obama signed the bill last year.

Four district courts have now heard challenges to the law, with two upholding the law and two ruling against it. Naturally, the judges deciding in favor of the law were both appointed by Democrats and the two ruling against it were appointed by Republicans. In all of the cases the central issue is the constitutionality of the individual mandate. Although the mandate’s infringement of personal liberty is what most upsets mandate opponents, the question the courts have focused on is the more mundane one of whether the mandate falls within the scope of the federal government’s power to regulate interstate commerce.

Under the Constitution, the federal government has only those powers specifically granted to it in that document, one of which is the power to regulate interstate commerce – known as the “Commerce Clause.” This authority has in the past provided the legal basis for a wide range of federal legislation. A key argument of the plaintiffs in the health reform legal challenges is that declining to purchase health insurance, which the federal government would penalize under the law, can’t be considered commerce because it doesn’t constitute activity of any kind. Someone who chooses not to buy health coverage is not engaging in commercial activity, they argue, and so is beyond the reach of the government’s regulatory powers under the Commerce Clause. In defense of the law, the government has argued that an individual’s failure to purchase coverage is economic activity because it’s a unique commodity.  Not buying coverage, they say, results in other Americans picking up the cost of their health expenses when they receive uncompensated care at an emergency room. Thus, failure to purchase coverage disrupts insurance pooling arrangements, causing higher costs for others, and so does represent commercial activity. 

A secondary, but hugely consequential, issue in these cases is what should happen to the rest of the law in the event that the mandate is deemed unconstitutional. On this point, the two courts ruling against the law parted company. Prior to the Florida court ruling, a Virginia District court found the mandate unconstitutional but also ruled that the rest of the law, including guarantee-issue and the other market reform provisions, should stand. Going way beyond his Virginia colleague, the Florida judge ruled the entire law invalid since it did not contain a severability clause – specific language stating that its provisions were severable and that if one should be stricken the others should nevertheless take effect.

The cases decided so far and others yet to come are all just a run-up to the final action, which will likely come within one to two years when the Supreme Court has its say on the matter. Unless and until the Supreme Court overturns any of its provisions, health reform will remain law.

We will keep you informed of any new developments.

Simplicity Health Plans – a New Choice for Small Group Employers

Simplicity Health Plans offers the small group employer an alternative to the standard plans offered by the carriers. 

They provide the  self insured employer HSA or HRA plans down to 2 lives.  They can cover voluntary groups as long as there is 100% participation and employer sponsored groups with as little as 50% of the employee only costs paid by the employer.  For groups with less than 5 employees, 100% of the employees not covered elsewhere need to be included.  For groups of 6 to 10 employees 100% less one of the employees not covered elsewhere need to be included.  For groups with 10 or more employees 75% of the employees covered elsewhere need to be included. 

They offer medical claims administration, TPA functions, pharmacy, dental and vision, stop loss reimsurance COBRA administration, Health Coaching and Wellness programs designed to reduce claim expenses.

They can provide carve out plans for specific classes of employees, such as management only plans.

For more information please contact Gary Whiddon at

Do Dental and Vision Plans Have to Cover Dependents to Age 26?

According to the Department of Health and Human Services (HHS)  the Department’s position that if benefits are “excepted  benefits” under HIPAA, the PPACA’s group health plan mandates and insurance  market reform requirements (e.g., no lifetime dollar limits on essential  health benefits, only “restricted” annual dollar limits on essential health benefits prior to 2014, no annual dollar limits on essential health benefits in 2014 and beyond, extended plan eligibility for adult children up to age 26, no waiting periods in excess of 90 days [effective 2014], insured health plan nondiscrimination rules, new internal claims and appeals/external review  processes) do not apply. 
A dental or vision benefit plan is a HIPAA-excepted benefit if it is:

 *Provided under a separate policy, certificate or contract of insurance (for insured plans)

 * Is otherwise not an integral part of the health care plan.
 For dental or vision benefits to be considered not an integral part of the plan (whether insured or self-insured), participants must have a right not to  receive the coverage and, if they do elect to receive the coverage, must pay
an additional premium  Accordingly, if a plan provides its dental or vision benefits pursuant to a
separate election by a participant and the plan charges even a nominal employee contribution toward the coverage, the dental or vision benefits would constitute excepted benefits, and the PPACA group health plan mandates and insurance market reform provisions would not apply to that coverage.

To put this in “plain english”  If the dental and vision plans are provided by a separate carrier than the medical and if an employee can make a separate election and premium payment for the dental and vision without having to have these benefits mirror the medical,  then the carrier does not have to offer dependent benefits to age 26.  Many dental and vison carriers are offering to continue benefits to age 26 as a courtesy, please check with the carrier to determine their position.

Choosing the Right Individual Health Plan


As so many American are leaving their jobs (voluntarily or otherwise), there is a need for alternatives to high priced COBRA coverage.  The best option in an individual plan.  There are so many options and plans available, and the task of finding the right one can be daunting.  These  tips can help you find a low-cost individual health insurance policy that fits your needs.


Find Out What’s Covered
 Before you choose a health plan, find out what’s covered. For instance, is your family doctor covered? What is the coverage for prescription drugs?  You want a health insurance policy that covers all your medical needs, so check the details before you buy.

Find Out What’s Not Covered
After you learn what’s covered, find out what ism’t. For instance, many policies won’t cover acupuncture or in-home nursing care. Others won’t cover treatment for depression, anxiety and other mood disorders.

If you have a specific condition that requires a specialist, make sure it’s covered under your prospective plan.

Choose Between an HMO or a PPO
For low-cost care, an HMO is best. HMO’s typically have low deductibles and co-payments, resulting in minimal out-of-pocket costs. However, HMO’s also require you to select an in-network doctor to coordinate all of your medical care, and you cannot visit a specialist without being referred by your primary care doctor.

PPOs, on the other hand, offer a much broader range of health care—but it comes at a price. Patients can see almost any doctor of their choice, provided they are part of the network. Plus, visits to specialists don’t require referrals. However, premiums and deductibles for PPO plans are generally higher than those of HMO plans.

Decide Whether You Want a Low Premium or Cheap Co-Pays
What’s better—low premiums or cheap co-payments? It depends entirely on your situation.

Healthy applicants who rarely visit doctors may opt for lower premiums and higher co-pays. However, those with chronic health conditions may save money with cheaper co-pays and higher premiums.

  1. Lifetime Maximum Benefit
    A lifetime maximum is a cap on the amount of benefits you can receive, usually around $1 million. For most people that amount is adequate. However, if a chronic condition forces you into the hospital every few months, a $1 million cap may not be enough.
  2. Make Sure Your Prescriptions Are Covered
    If you take prescription drugs, make sure your medication is covered. Many monthly prescriptions cost hundreds of dollars out-of-pocket, so make sure all your medication is covered before purchasing a policy.

Health insurance premiums can vary greatly by company—sometimes by as much as 50% for similar plans. So it pays to shop around.  Individual plan carriers can reject an applicant or increase the premium based on the health condions advised.